IN RE: JAMES LOVETT CASE NO: 99-60728 MEMORANDUM OPINION objection to claimed exemption
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
CORBIN
IN RE:
JAMES LOVETT CASE NO: 99-60728
DEBTOR CHAPTER 7
MEMORANDUM OPINION
I. Facts & Procedure
This case comes before the court on the Trustee's objection (Doc. #21) to the claimed exemption of certain assets by the Debtor, James Lovett ("Lovett"), under K.R.S. 427.010(1) in his "Amendment to Schedule C" (Doc. #12). The specific items claimed exempt as household goods are an air compressor, three spray guns, miscellaneous hand tools, and a floor jack. (collectively, the "Tools"). On January 13, 2000, counsel for Lovett and the Trustee argued before the court whether any or all of the Tools are exempt under K.R.S. 427.010(1), the Kentucky state statute for exempt household goods. During the hearing, the counsel for Lovett asserted that there is very little Sixth Circuit case law on the application of K.R.S. 427.010. In light of the absence of applicable Kentucky law, Lovett's counsel presented to the court In re Kunkle, 1993 WL 767974 (Bankr. N.D. Iowa) as authority supporting Lovett's position. The Trustee's response was that notwithstanding Kunkle, the items at issue still do not qualify under K.R.S. 427.010(1) because they are tools of the trade, not household goods, and therefore fall outside the scope of the statute. After presenting their arguments, the parties subsequently filed an agreed order of submission on January 31, 2000 allowing the court to take this matter under advisement for ruling (Doc. #27).
In ruling on this matter, the court must resolve two issues. First, it must decide whether it can apply the law for exempt household goods as set forth in Kunkle. Resolution of this issue hinges on whether the language of the Iowa's exemption statute is similar enough to text of the Kentucky exemption statute. Second, if ruling of Kunkle applies to this case, the court must decide whether the Tools are exempt as household goods.
II. Analysis
A.
After further researching the issue, the court agrees with counsel of Lovett's assertion that there is no oft-cited case law discussing the application of K.R.S. 427.010(1). The Sixth Circuit is not alone in its struggle to find a clear standard which determines what is and is not a household good. See e.g., In re Reid, 121 B.R. 875 (Bankr. D.N.M. 1990). Therefore, the court finds it necessary to look elsewhere for guidance. Lovett has cited In re Kunkle as authority for the claimed exemptions. However, applying the law of this Iowa case is potentially problematic because the text of Iowa's exemption statute differs from K.R.S. 427.010(1). (1) Specifically, the language in the Iowa statute refers to both "household furnishing and goods", while K.R.S. 427.010(1) refers only to "household furnishing." Therefore, before the court can apply the Iowa case to this matter, it must be satisfied that notwithstanding the omission of the word "goods" from the K.R.S. 427.010(1), the two statutes are nonetheless similar enough so that the Iowa case law can be applied. For the reasons set forth below, the court holds that K.R.S. 427.010(1) includes household goods within its list of exempt personal property of an individual debtor.
First, K.R.S. 446.080(1) requires that all Kentucky statutes to "be liberally construed with a view to promote their objects and carry out the intent of the legislature." By placing "household furnishings" at the beginning of K.R.S. 427.010(1) this court believes that the Kentucky legislature intended the phrase to serve as a catch-all for all personal property in or around a home. Furthermore, the drafters phrased the statute to include "all household furnishings" (emphasis added) which serves as an indication that this category of personal property should be defined broadly rather than restrictively.
Second, bankruptcy practitioners in this jurisdiction routinely interchange household goods for household furnishings. Evidence of this common practice is seen repeatedly in the record of this case as both the counsel for Lovett and the Chapter 7 Trustee. have used the term household goods to refer to items claimed exempt under K.R.S. 427.010. See e.g., "Schedule C - Property Claimed as Exempt" (Doc. #1); "Amendment to Schedule C" (Doc. #12); "Trustee's Objection to Exemption" (Doc. 21); and "Agreed Order of Submission" (Doc. #27).
Based on the foregoing, the court holds that the phrase "all household furnishings" as used in K.R.S. 427.010(1) is broad enough to include items of personal property that may also be classified as household goods.
B.
In holding that the wording and meaning of K.R.S. 427.010 is sufficiently similar to Iowa Code 627.6(5), the court will now apply In re Kunkle to determine whether any or all of the Tools are exempt.
The test used in Kunkle to determine whether a piece of personal property qualifies as a household good or furnishing under Iowa's exemption statute originated in the Fourth Circuit. See In re McGreevey, 955 F.2d 957 (4th Cir. 1992). The Fourth Circuit states that household goods are "typically found in or around the home"and are used "to support and facilitate day-to-day living within the home, including maintenance and upkeep of the home itself." See Id. at 961-962. After reviewing the evidence in the record, the court considers that the hand tools claimed exempt by Lovett are items of personal property which are typically found in the home and can be used to facilitate day-to-day living around the house. However, the court does not consider the air compressor, the three spray guns or the floor jack claimed as exempt to fit the same definition. A floor jack and an air compressor are not typically found in or around the house, while spray guns are items that are used sparingly rather than on a day-to-day basis.
III. Conclusion
Based on the foregoing facts and analysis, the court holds that the hand tools listed in Lovett's "Amendment to Schedule C" are exempt under K.R.S. 427.010. In addition, the court holds that the air compressor, spray gun and floor jack listed in the "Amendment to Schedule C" are not exempt under K.R.S. 427.010.
Dated: 02/17/00
By the court -
_____________________________
JOSEPH M. SCOTT, JR.
U.S. BANKRUPTCY JUDGE
Copies to:
Marcia Smith, Esq.
Maxie Higgason, Trustee
UNITED STATES
BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
CORBIN
IN RE:
JAMES LOVETT CASE NO: 99-60728
DEBTOR CHAPTER 7
ORDER
In accordance with the memorandum opinion entered this day, IT IS HEREBY ORDERED that the Trustee's objection (Doc. #21) to the claimed exemption of certain assets under K.R.S. 427.010(1) by the Debtor herein is OVERRULED as the hand tools listed in Debtor's "Amendent to Schedule C" (Doc. #12), but SUSTAINED as to the air compressor, spray gun and floor jack listed in Debtor's "Amendment to Schedule C."
Dated: 02/17/00.
By the court -
_____________________________
JOSEPH M. SCOTT, JR.
U.S. BANKRUPTCY JUDGE
Copies to:
Marcia Smith, Esq.
Maxie Higgason, Trustee
1. Iowa Code 627.6(5) states in relevant part that "[a] debtor who is a resident of this state may hold exempt from execution . . . [t]he debtor's interest in household furnishings, household goods, and appliances held primarily for personal, family, or household use of the debtor or a dependent of the debtor . . . ." compared to K.R.S. 427.010(1), which states in relevant part that "[a]ll household furnishings, jewelry, personal clothing and ornaments not to exceed three thousand dollars ($3,000) in value . . . ." are exempt.